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January 10, 2013

Nokia Surprises Us by Releasing Q4 Smartphone Results Early. So 3% for Q4 and 5% for full year 2012? And they think this is 'good' ???

So here we go.. Nokia surprised a lot of Nokia-watchers by releasing its official smartphone shipments numbers today, well before the final Q4 results are due. So we can do the Nokia part of Q4 Bloodbath analysis and also the full year for Nokia. As Nokia is the last vendor left providing Symbian, we can do Symbian for Q4 and full year, and as Nokia does the vast majority of Windows Phone, we can also do preliminary estimate for Q4 and Full Year 2012 results for Microsoft's Windows Phone ecosystem. Is it the promised 'third ecosystem'...

NOKIA Q4 SMARTPHONES

Nokia smartphones shipped 6.6 million units in Q4, up only 5% from Q3 when it sold 6.2 million smartphones. This is down from 19.6 million one year ago when Lumia first launched and 28.8 million when Nokia sold only Symbian based smartphones.

Nokia preliminary market share for Q4 is 2.8% (on my target market total unit sales number Q4 of 240 million smartphones). This is down from 3.6% in Q3 and 12.4% one year ago. More ironically, as Nokia's market share was 28.8% in Q4 the last quarter before the Elop Effect and Nokia's new strategy, Elop has managed to scare away literally 9 out of every 10 customers in just 24 months. This is a world record in market failure - not just in mobile phones, in any industry ever, by a global market leader of a Fortune 500 sized company. Literally a world record failure!

For the full year 2012 Nokia has shipped 35.0 million smartphones and end the year with 5% market share. That is a collapse from 2011 when it sold 77.3 million smartphones and held 16% market share, which itself was a collapse from 2010 when Nokia still saw massive growth in its smartphone unit and sold 103.6 million smartphones and had 35% market share.

So currently Nokia's smartphone unit holds 3% market share with essentially flat unit sales and declining market share. Its current ranking for Q4 in the Top 10 is definite to be worse than Samsung, Apple, Huawei, Sony, ZTE, LG, Lenovo, HTC and RIM. Yes. Nokia's best possible finish in the Top 10 is ranked 10th. Nokia was on top of the Top 10 when Elop took over two years ago. But Nokia may have tumbled out of the Top 10 smartphone makers altogether like Motorola did last Quarter. The company chasing Nokia into the Top 10 is Chinese Yulong who sell smartphones under the Coolpad brand and they are expected to sell between 6 and 7 million smartphones this quarter, so it will be very close whether Nokia falls out of the Top 10.

Meanwhile for the full year its not quite as bad for Nokia, as they had early 2012 quarters with healthier sales to help boost their rankings. Nokia's 35 million smartphones sold for the year 2012 puts them ahead of Lenovo, RIM, LG and HTC. Nokia cannot finish lower for the full year than 6th biggest smartphone maker, but also, we know it can't catch Samsung, Apple or Huawei, so Nokia cannot be better than 4th. The race is now between Sony and ZTE for whether Nokia finishes 4th, 5th or 6th. Nokia was twice as big as its nearest rivals when Elop took over.

LUMIA, WINDOWS PHONE, SYMBIAN

So Nokia also announced it had sold 4.4 million Lumia smartphones (they didn't give a split of how many of the new Lumia 920 running Windows Phone 8, and how many of the older obsolete Lumia series, hopefully we will have that split in the official Q4 results). But we can obviously calculate the Symbian/MeeGo split out of that, at 2.2 Million non Lumia Nokia smartphone sales.

So Symbian sales are down 37% from Q3, to 2.2 million. Lumia sales now with the new Windows Phone 8 finally launched, are up 52% from Q3 ie up from 2.9 million to 4.4 million. The 'boost' from Windows Phone 8 is a measerly 1.5 million Lumia units - a true catastrophic disaster when we compare for example to 2010 when Nokia launched a new version of Symbian, S^3 and a new flagship, the N8 (like the Lumia 920 now) and Nokia in the Q4 quarter sold 5 million new Symbian S^3 devices including 4 million N8 devices. And the smarphone market has more than doubled since then. If Elop knew what he was doing, he should have sold at least 8 million Lumia 920 units now - yeah, if the consumers were willing to buy Lumia and the carriers/operators and distribution were willing to sell it haha. The news we had earlier this week via Fortune was that a consumer survey of smartphone owners in the USA and Europe by Bernstein found that the Windows Phone customer loyalty is in the toilet, only 37% of Windows Phone owners are willing to buy another Windows Phone smartphone (compared to 95% for the iPhone or 75% for Android smartphones. No wonder Nokia is now suddenly willing to consider shifting to Android).

So for the first time in five quarters of sales side-by-side, Lumia series finally outsells the remaining Symbian smartphones. And now Symbian does tumble to 6th in the ranking of smartphone operating system sales in Q4 behind Android, iOS, Blackberry, bada and Windows Phone. The end is truly in sight now, Symbian Q4 market share is under 1%.

What of Windows Phone? Nokia has been shipping about 75% of all Windows Phone smartphones recently and there is no reason to think this would have changed for Q4. If we use the same ratio, the preliminary estimate for Q4 Windows Phone total shipments would be 5.9 million smartphones and a market share of 2.4% for the quarter. Yes, bigger than Symbian but nowhere near Blackberry, and very close to losing to bada as well. Windows Phone may be currently either 4th or 5th biggest smartphone OS in Q4. For the full year 2012 it isn't that pretty.

For the full year Symbian sold 18.5 million smartphones and Windows Phone will be somewhere between 15 million and 17 million. bada is going to be bigger than Windows Phone but will chase Symbian. Blackberry is nearly twice as big as Symbian at 33.5 million smartphones and Android obvously won the year and iOS is second. So the rankings of the full-year 2012 look like this: 1 Android, 2 iOS, 3 Blackberry. 4th is race between Symbian and bada. 6th is definitely Windows Phone at 2% market share. So much for your promised 'Third Ecosystem' that was supposed to have 20% market share or better by now haha by so many 'experts'.

MY FORECAST? HALF RIGHT, HALF WRONG

Some Tomi-haters are jeering me for that Kantar numbers analysis I gave. I gave the numbers as Kantar reported, and projected from those what it would mean for Nokia and Windows Phone and Symbian. I said the finding was surprising and I flipped my balance of Windows vs Symbian from what I said in November (two thirds Lumia, one third Symbian) to the other way around. Still, I predicted 6.8 million total smartphones for Nokia, it delivered 6.6 million. Thats almost spot on. I did originally have the mix almost perfectly for Lumia/Windows in November but now did alter it to the wrong mix. Yes. That was a bad call. Still, on the big picture I was very close.

As to Nokia actual performance we have the full story now: Nokia sold smartphones in the following pattern since Elop took over:

Still, from Spring 2011, I was by far the most pessimistic of any analysts making Nokia or Windows Phone forecasts at the time. Now look at the results? I was TOO OPTIMISTIC. Nokia did even worse than I was able to forecast and NOBODY had published a forecast worse than mine. Do I prove value on this blog?

Then when I had seen how much Elop had mismanaged the Nokia Lumia launch and first Lumia handsets, I did offer a revised forecast for year 2012 sales in June of 2012, where I downgraded my forecast to 5.3 million total smartphones (ok, that was too pessimistic, it was 6.6 million, but the average of these two forecasts was almost spot-on) and my forecast for Lumia sales in Q4 - with the stated clarification, that two Windows Phone 8 based Lumia phones would be launched by November 2012 - said Q4 Lumia sales would be 5.0 million units (was 4.4 million). For the full year 2012 I predicted 19.0 million Lumia shipments (the most pessimistic view in the industry) and Nokia only managed 13.9 million. Again, from June 2012, that was THE most pessimistic Lumia forecast by any forecaster or expert in the industry, and AGAIN I was too optimistic on Lumia.

No forecaster gets it 100% right, that is not possible. But the professional forecasters amongst us try to offer better insights and also - very importantly - to revise forecasts when facts change - AND to EXPLAIN WHY their forecasts have changed. I have done so diligently on this blog, and if you trusted what I said, you were closer to the truth than any other published expert at the time. During the summer of 2012, looking into Windows Phone 8, many of my peers were promising 8 million to 10 million Windows Phone Lumia sales levels. I said 5.0 million, was crucified here for being too pessimistic - and yet, I was the closest to the truth and even I was too optimistic on how incredibly poorly Nokia would perform in Q4.

With that, open for discussions and debates. But people commenting - if you come here to gloat that I was 'wrong' - I will delete your comment without a moment's thought unless you can provide any analyst whose forecast at the time - by May of 2011 or by June of 2012 - had a better number than mine. That Kantar projection was a warning on a usually-reliable early number, and I clearly state now, my revised mix, based on the Kantar numbers, was wrong; but my earlier mix of Lumia/Symbian was spot-on (I should have stayed with the November forecast haha).

PS what will Nokia and Windows Phone look like in smartphones for 2013? The market share will linger in the 2% to 3% range, it will not somehow magically now bounce up to 12% or 16% or 20%. That will not happen. I trust I have enough of a track history of being the most accurate Nokia smartphone sales forecaster that you can trust that prediction. If I'm off, I'm more likely to be too optimistic on Nokia than too pessimistic, but even if I'm off by 100% then Windows will be no bigger than 6% this year. And it won't be that big. And even 6% won't make Windows Phone anything like the, ahem, 'third ecosystem' haha.

Also don't forget my new series of blogs, telling each Nokia management mistake on this journey to the world record of management failure by Elop, in simple, one problem per blog postings (short ones, honestly) each illustrated with one picture

And to those who might suggest this disaster was not foreseeable, actually Nokia itself acknowledged all these problems we see now, in its SEC Form 20-F filing to the New York Stock Exchange in March of 2011. All the problems they said might happen - actually did come true. This is the worst disaster in any industry, ever. And if every risk that Nokia anticipated with its high-risk Windows strategy DID come true already, then don't expect any kind of speedy - or even slow - recovery. Nokia is doomed. Or at least, is doomed if Nokia's own risk assessment was this accurate. You judge for yourself, read the updated analysis of Nokia Form 20-F and the truth (with statistics).

Comments

Good work Tomi. The key problem for Nokia is truly brain dead easy to understand: NO ONE WANTS A WINDOWS PHONE! The reasons behind that statement are not changing so any WINDOWS PHONE WILL BE A FAILURE because of, let me count the ways:

1 - because of all the ill-will towards Microsoft NO WANTS A WINDOWS PHONE.
2 - because of the past and present business practices of Microsoft NO ONE WANTS A WINDOWS PHONE.
3 - Because of all the partner screwing by Microsoft NO ONE WANTS A WINDOWS PHONE.
4 - Because of attempts to jam SKYPE down the throats of the carriers NO ONE WANTS A WINDOWS PHONE
5 - etc. feel free to add more to the list.

The FAILURE OF WINDOWS PHONE is a Microsoft failure not a Nokia failure. Nokia just decided to go along for the ride. Why the chose this path is a great lesson on what not to do

First to all - I deleted a few trolls who clearly didn't read this blog were I state categorically that I was wrong with the Kantar split but still was right on the overall Nokia smarpthone sales projection for Q4.

Now to comments

John - thanks and yes we agree. Note, the independent surveys also say the same, Yankee's survey of Lumia satisfaction is disasterous (4 out of 10 rating it the worst phone they've ever seen) and the Bernstein survey of US and European smartphone owners finding only 37% of Windows Phone owners willing to return to the brand on their next purchase behind Blackberry 57%, Android 75% and iPhone 95%. No wonder Lumia prices instantly fall and the line has zero resale value. If I was a retailer, I wouldn't let my staff sell Lumias either to my customers...

Interested - thanks, yeah, I'm kinda used to it. Almost every 'discovery' I make in this industry will rub some people the wrong way, who then attack me as a heretic, from real camera supporters to iPod fans to the laptop users to now yes, Microsoft trolls haha..

Jbs - great plan. Now how can we achieve that?

jo - totally agree. Nokia sold 4M Lumias in Q2 of 2012, and that was sad performance in the third quarter of Windows Phone on Nokia. Now 6 months later they only manage 10% bette? Pathetic

The astrosurfers are celebrating today, Tomi missed to predict the smartphone sales for Q4. Too bad for you that WP is still a failure, and its marketshare is shrinking for every quarter that passes. But dont feel bad, at least you can feel unique owning a WP smartphone, when every person walks around with an iOS or Android device. You are as special as the people that own Zune or a Surface RT tablet.

So what is those people claim? The cup half empty or half full? Even if Tomi fail he was closer than those who claim sales around. 8-10 m.
The problem is Nokia is going nowhere and people dont understand.
And sorry no WP for me even i like Nokia and always i used Nokias.

I guess why people now may get mad is that they are not necessarily able to follow your revised forecasts. Not a lot you can do about it, I guess.

Keep it up, I'd say that it's going to be tougher in the next few quarters. Wish you best of luck in finding the correct figures in your crystal ball.

You may want to fix one mistake in your blog. Your last but one forecast was not made in November, but it was made on December 7.

Other thing you might want to keep in mind. In August you said WP will be 1-2% in 2013. In November you said it will never pass 2%. Now you say 2-3%. Not a huge issue, but I just want you to know you are being followed. Just like you follow other analysts and let them know if they make mistakes.

@S: Elop and Nokia continue to pat themselves over the back for mediocre results. Having a goal of breaking even, and touting "underlying profitability" (which suggests no net profitability) is sad. It seems it will take a major shock (Elop fired, Nokia turning to Android, sale or bankruptcy, something like that) to convince some people of the ongoing problems. When it happens, people like that will say "What happened?! I thought they were doing so well!"

On the other hand, if Nokia achieves actual profitability, and it becomes sustainable (which it is not; the pre-earnings warn of expected losses for Q1), then people like me will say "What happened?! I thought they were doomed!"

The estimates say: Expect continued low WP sales, continued struggles for Nokia, no known great hope that will save them quickly and easily.

effex - actually I didn't miss the forecast, I got two out of 3 parts of the Nokia Q4 forecast essentially spot-on, the most important being the big number, total smartphone sales, I said 6.8M, Nokia delivered 6.6M. I also said 3% market share, which is exactly what Nokia has. Where I went wrong was the split, I thought 2/3 Symbian vs Lumia, based on the Kantar finding, but it was the other way around. Two out of three elements of the Nokia Q4 forecast is not that bad, try to find me any published forecast from December that was more accurate haha ie had all 3 correct. I doubt you'll find anyone.

geektech - totally correct and yes, Nokia promised 1 to 1 conversion from Symbian to Windows Phone, in February 2011 when the Microsoft strategy was announced. So far out of 26.6 million attempted Symbian conversions per quarter, only 4.4 million have succeeded so Nokia has bled 22.2 million loyal Nokia smarpthone users to rival brands. Elop's strategy failure rate runs at 85%. And he is still allowed to remain as CEO? Why?

CN - thanks, I really appreciate that. This is not easy, prognosticating about such a highly volatile industry and still remaining the most accurate forecaster in mobile haha.. About the 2% or 3% - that may be difference between Nokia Lumia forecast ie Nokia Windows Phone (smaller), vs Total Windows Phone share with all manufacturers (bigger), as my gut feeling suggests, but yeah, I would need to go take a look. At that level, 2% or 3%, it really doesn't matter if Apple has 22% and Android 70%..

JJ - totally agree. And note, the 4.4 million now in Q4 is only 10% up from Nokia's next best quarter of Lumia sales ever, which was Q2. so in 6 months of massive hype and marketing, while the industry grew 60%, Nokia only managed to inch up a lousy 10%.. Pathetic really.

winter - LOL, yes, soon we need to help set up a charity to assist those with Lumianus-Windowsia the crippling condition of having contracted a Windows Phone based smartphone made by Nokia.

Keep the comments coming and don't even bother to respond to the trolls, I'm policing them out.

Anyone who wants to pick on my supposed inaccuracy in Nokia forecasting - I was the most accurate Nokia forecaster again for this quarter - find me anyone who is published in May 2011 or June 2012 or December 2012 with a better number than what I published. Else don't bother to try to claim I was wrong. I was still the most accurate while I generally am too optimistic still, about Nokia (I love Nokia)

Last year you predicted the incredible decline of Nokia smartphone, and what was looking impossible, was at the end even a bit too optimistic

You did predict 5m Lumia for Q4 2012 ... down from a previous prediction of 7m ... and you have been super precise.

Now, I'm curious to se if you can forecast 2013 Nokia Lumia ... my feeling is that Q4 2013 could be no more then 5m Lumia ... possibly less then Q4 2012 ... but ... you are the expert ... so ..looking forward for a new forecast for full year 2013 and maybe above 2013

Hi Tomi did you know that the infamous droid is now also in your fridge? http://business.financialpost.com/2013/01/08/google-android-expands-to-rice-cookers-fridges-in-move-beyond-mobile-phones/
So even if Nokia did beat its greatest competitor in smart phones (Which is highly unbelievable atm) Google would still win!
@ John I have another one to add to the list!
Windows 8. Because that is the ultimate example of Microsoft fascism with the crappy metro UI that nobody wants I mean had Microdicksoft Just stuck with XP then I'm almost certain that the lumia would be an impressive success. However the problem is that nobody likes Vista,7,8 which also cripples smart phone sales.

@CN "Other thing you might want to keep in mind. In August you said WP will be 1-2% in 2013. In November you said it will never pass 2%. Now you say 2-3%. Not a huge issue, but I just want you to know you are being followed."

You point correctly it is not a huge issue.

Considering that Windows Phone market share is so near the end of scale (zero), an error of 2% is acceptable.

I bet nobody in Nokia -- not even Elop -- would be as precise as Tomi. And let's not forget other "analysts" that predicted that Windows Phone would reach 20% of market share.

@ E_lm_70
I guess it will be difficult to guess the outcome for end of 2013.
Up to now, the sales of Nokia were following a trend. Tomi had a model to predict that trend, and used the most pessimistic one (and was right to do so).

But sometimes, it's no longer possible to only model "trend" : a single event can change everything, abruptly.

This is typically the case when 2 parties go to war : the outcome of each one will largely depend on a short-lived heated effort, with dramatic consequences. No trend here.

Nokia doesn't "go to war", but may face a similar "shake-up" situation next year : will it remain "Nokia" ?
Could it be broken in several parts ? Will it go bankrupt ? May the current CEO face investigatation on charge of double-agenda ?

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Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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